7 Signs that You Are Ready to Buy a Home
5 minute read
March 13, 2014


ready to buy 7 Signs that you Are Ready to Buy a Home

Buying a home is a quintessential part of the American Dream. It is engrained in our culture to want real estate to call our own. Although you may be certain that you want to own a home, how do you know if you are ready to make what will most likely be the biggest purchase of your life? The following are 7 signs that you are ready to buy and own a home.

1- You Have a Budget and You Stick to It

The biggest way to ensure that you are ready to own a home is to access your budgeting skills. Are you aware of how much your income is and where it is allocated? If not, it is highly suggested that you take a close look at your income and expenses to see if you can afford homeownership. It is a big financial undertaking to own a home and you want to assure that you  are ready for that commitment.

Before applying for a mortgage try adhering to a budget for a few months. While you are getting used to a monthly budget factor in the higher costs of homeownership such as utility bills, home maintenance, property taxes and insurance. Being proactive about monthly budgeting is the best way to assuring your success in homeownership.

2- You Have a Reliable Source of Income

In most cases people finance their homes for 30 years, a mortgage is a long term commitment. That being said you want to be sure that you have a reliable source of income when purchasing a home. Also, if there are any life changes that you are planning you’d want to account for that as well. For instance, if you expect student loans to go back into repayment in the next 6 months, you’ll want to account for that being taken out of your income. If you are qualifying for a mortgage for two incomes keep in mind that you may want the flexibility of not having to rely on both incomes to make your payment. Ultimately no one can know exactly what their income will be 6 years from now, but you want to look ahead and feel secure with you income before making a 30 year financial commitment.

3- You’ve Saved a Sizable Downpayment

There are many loans programs available today that don’t require a 20% downpayment, but even lower down payment programs require a substantial amount of money. A 5% downpayment on a $200,000 home is $10,000. Being prepared with a downpayment will give your more equity in a home and access to lower interest rates. Also keep in mind the closing costs associated with purchasing a home. While you may be able to receive some seller concessions, there may be additional closing costs that you are responsible for.

4- An Emergency Savings Account is in Place

Once you’ve bought a house you are responsible for your monthly mortgage as well as any maintenance on the home. Now when the garbage disposal is making a funny rattling sounds and getting clogged you can no longer call your landlord to come and fix it. Should you furnace decide to stop working in the middle of January you want to be assured that you can quickly remedy the situation with an emergency savings account.

Life throws all types of scenarios our way that may require accessing an emergency savings account. By having this savings set aside you can be comfortable that no matter what the circumstance you can still pay your monthly bills.

5- Your Credit is in Good Standing

The mortgage application process requires a review of your credit history. Lenders look for a variety of factors when determining a credit worthiness of a borrower. The biggest factor lenders look at is you payment history. They want to see timely payments on established credit for at least two years. Additionally lenders favor credit that shows diversification and lower utilization ratios. Having a solid credit history is invaluable while applying for a mortgage.

6- You are Ready for a Commitment

Buying a home is a big financial investment. There are closing costs and fees that are associated with buying a home that are typically much greater than the amount of money you’d need for a security deposit on an apartment. Furthermore, there are closing costs and fees that are associated with selling a home. Therefore, before purchasing a home you want to make sure that you a will to make a commitment of at least 3-5 year. Be sure that  you’ve settled in an area and have done your research. You know that this is a place that you want to live and are expecting to do so for the upcoming years in order to make your investment worthwhile.

7-You are Ready to Make Your Home Your Own

It is very logical to make sure that you are financially prepared to own a home, but homeownership is also a very emotional process. A great way to gage whether or not you’re ready to own a home is if you are ready to make something your own. If you are tired of living within beige walls and getting permission before making any changes to your living space, you may be emotionally prepared to have a place to make your home. There is great pride in homeownership. It is comforting to come home after a long day at work and know that you are putting your hard earned money toward something that is your own.

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